U.S. Stocks Resume Drop After China Data as Dollar, Oil Decline

China's Managed Risks in Move to Consumer Economy
  • S&P 500 fails to solidify gains as retailers retreat
  • Dollar slips most this month as EM currencies rebound

Mixed data on the state of the Chinese economy did little to alter perceptions on the timing and pace for higher interest rates in the U.S., leaving equity investors to focus on company news and deals. The dollar slipped from near a 10-year high and oil tumbled.

The Standard & Poor’s 500 Index capped its fifth decline in six days with the tone set by news on mergers and a selloff in retail shares sparked by Macy’s Inc. The retreat in U.S. stocks came amid gains in most of Asia and in Europe. The dollar had its worst day this month as Turkey’s lira led a rebound in emerging-market currencies. U.S. crude fell toward $43 a barrel, while gold futures extended losses at a three-month low.

Investors are trying to gauge whether the Fed will finally pull the trigger on higher rates next month.
Investors are trying to gauge whether the Fed will finally pull the trigger on higher rates next month.

With U.S. data signaling the world’s biggest economy is strong enough to withstand higher rates, investors are monitoring figures from overseas to gauge whether there are any threats to American growth that may still concern the Federal Reserve. Reports Wednesday showed Chines factory output continued to weaken in October, while retail sales rose more than expected, keeping the focus on Asia’s No. 1 economy after anxiety about a slowdown sparked a summer swoon and spurred the Fed to stand pat on rates.

“There’s a lot of news behind us and not a lot of potentially market-moving news ahead of us in the short term,” said James Gaul, a portfolio manager at Boston Advisors LLC, which oversees $2.8 billion. “It seems like it’s going to be quiet because there aren’t a whole lot of obvious catalysts right now. Today might just be a little bit of a digestion day.”

Goldman's Song Sees More China Stimulus on Low Inflation

Stocks

The S&P 500 slipped 0.3 percent to 2,075 by 4 p.m. in New York, after halting a four-day slide of 1.5 percent on Tuesday. The index has rebounded more than 12 percent from its August correction, climbing back to the range it was within during the first seven months of the year.

Trading in S&P 500 stocks was 8.4 percent below the 30-day average with U.S. bond markets closed for the Veterans Day holiday.

Among stocks moving on corporate news, Macy’s slumped the most since 2008 following a reduction in its profit forecast. Retailers Kohl’s Corp. and Nordstrom Inc. fell at least 3.7 percent. Xerox Corp. rallied 6.6 percent and home security company ADT Corp. jumped 4.4 percent after its quarterly results beat analysts’ estimates. Apache Corp. slid 7.3 percent after Anadarko Petroleum Corp. said it wouldn’t pursue a takeover of the company.

The Stoxx Europe 600 Index climbed 0.7 percent as SABMiller Plc gained 1.9 percent after Anheuser-Busch InBev NV sealed a $107 billion deal to buy the beer company. Carlsberg A/S climbed 6.2 percent after reporting profit that beat estimates and announcing job cuts to reduce costs. Henkel AG climbed 7.3 percent after raising its annual earnings projection.

Emerging Markets

The MSCI Emerging Market Index was little changed Wednesday, after four days of losses left the gauge at a five-week low. Benchmark gauges in Brazil, Turkey and Saudi Arabia advanced more than 1 percent.

Currencies from Turkey to South Africa advanced, trimming losses that have weighed on almost every emerging market this month, as investors bet the downside for riskier assets from a U.S. interest-rate increase next month won’t be as deep as expected.

Hong Kong’s Hang Seng China Enterprises Index dropped 0.7 percent, while the Shanghai Composite Index gained 0.2 percent. 

Commodities

Oil fell to a two-month low in New York as U.S. industry data showed crude stockpiles expanded last week, compounding concerns over a global surplus. West Texas Intermediate futures dropped 2.9 percent to $42.93 a barrel.

Government data Thursday is forecast to show supplies rose by 1.3 million barrels, according to a Bloomberg survey of analysts. OPEC is considering raising its official production target to take into account new member Indonesia, according to two delegates from the group.

Gold futures for December delivery lost 0.3 percent to settle at $1,084.90 an ounce on the Comex in New York. The metal fell to $1,084 on Tuesday, the lowest since Aug. 7.

Currencies

The dollar posted its biggest losses in November after climbing to the highest level in more than a decade as traders consider the timing and pace of U.S. rate increases. The greenback struggled to extend gains that pushed it at least 1 percent higher against all of its 10 developed-nation counterparts this month.

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major counterparts, fell 0.3 percent. The U.S. currency fell 0.1 percent to $1.0738 per euro after appreciating to $1.0675 on Tuesday, the strongest level since April 23. The U.S. currency dropped 0.3 percent to 122.84 yen.

Divergence in central bank policy has made the euro a chief casualty in the dollar's recent recovery
Divergence in central bank policy has made the euro a chief casualty in the dollar's recent recovery

Bonds

Euro-area government bonds advanced, pushing German two-year note yields to a record low, as the prospect of additional European Central Bank monetary stimulus overshadowed increasing political risks in individual nations.

U.S. corporate debt fell Tuesday, losing 0.051 percent, according to Bank of America Merrill Lynch Index after companies sold $6.25 billion in debt. The losses were led by the riskiest debt with the difference in yield between investment-grade bonds and junk debt rising to the highest levels this month. U.S. bond markets are closed today for the Veterans Day holiday.

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